A decrease in the EU rapeseed forecast and a drought in Canada could lead to a rise in quotations

Rape quotes on the Paris stock exchange fell for a second week in a row, despite forecasts of lower canola harvests in the EU and Canada, a deterioration in the condition of soybean crops in the US and rising oil prices.

During the week, November rapeseed futures on Paris Euronext fell 4.7% to €458.75/t, or $505/t, adding 4.7% to prices for the month on forecasts of production cuts.

If last week the quotations fell under the pressure of increased offers, especially from Ukraine, as a result of harvesting, then this week prices will be affected by forecasts of a decrease in the harvest in the EU.

The experts of the European Commission reduced the forecast of the rape crop in the EU in 2023 from 19.9 to almost last year's level of 19.4 million tons, although back in June they estimated it at 20.7 million tons. At the same time, the forecast of rapeseed imports to the EU in 2023/24 was left at the level of 5.8 million tons compared to 7.2 million tons in 2022/23 MR.

November canola futures on the Winnipeg exchange last week fell 2% to CAD 809/t, or $610/t, adding 10% for the month amid a lack of rainfall in the southern Canadian prairies. No precipitation is expected in Saskatchewan and Alberta over the next 7-10 days, although canola crops are in bulk, which could reduce yield potential and increase speculative price pressure.

In Ukraine, as of July 28, from 931.3 thousand hectares or 65% of the area, 2.498 million tons of rapeseed were threshed with a yield of 2.68 tons/ha (2.56 tons/ha last year). Precipitation is expected in the coming days, especially in the western regions, which will delay harvesting and reduce productivity, although for now production forecasts remain at the level of 3.8-4 million tons.

Purchase prices for rapeseed at the end of the week rose to $370-375/t or UAH 14,800-15,300/t with delivery to Danube ports, but traders are restraining purchases against the backdrop of rising freight rates from Danube ports to Constanta and lower world prices.

Today's report on the condition of the US soybean crop could lead to a sharp jump in soybean prices, which will accordingly affect canola and canola quotes.